Metro Bank fined £16.7m by FCA for monetary crime management failures
- Automated controls failed to adequately check £51bn worth of transactions
- Metro would have been hit with even bigger fine if it had not cooperated
- Lender’s boss Frumkin says Metro returned to profitability in October
Metro Bank has been fined almost £16.7million after a City watchdog probe found historic failures in the lender’s money laundering checks.
Between June 2016 and December 2020, Metro ‘failed to have the right systems and controls’ to adequately monitor over 60 million transactions worth more than £51billion, the Financial Conduct Authority said.
The regulator said Metro’s automated monitoring system for customer transactions ‘did not work as intended’.
‘Junior’ Metro staff raised concerns about some transaction data not being monitored in 2017 and 2018, but these ‘did not result in the issue being identified and fixed’, the FCA said.
It meant transactions taking place on the same day an account was opened – and any further transactions until the account record was updated – went unchecked.
Metro would have received a fine worth more than £23.8million but qualified for a 30 per cent discount as it agreed to resolve the matter.
It follows a £29million fine levied at Starling Bank last month for what the FCA described as ‘shockingly lax’ financial crime controls, which ‘left the financial system wide open to criminals’ over a four-year period.
The FCA’s most recent investigation also found ‘junior’ Metro staff had raised concerns about some transaction data not being monitored in 2017 and 2018, but these ‘did not result in the issue being identified and fixed’.
A fix was put in place in July 2019, but Metro still did not have a mechanism to ‘consistently’ check that all relevant transactions were being fed into the monitoring system until December 2020 – four and a half years after the system was implemented, the FCA said.
Therese Chambers, joint executive director of enforcement and market oversight, added: ‘Metro’s failings risked a gap being left in our defence against the criminal misuse of our financial system. Those failings went on for too long.’
Metro said in a statement it has since resolved transaction monitoring system failings and made transaction monitoring ‘enhancements’.
Metro chief executive Daniel Frumkin said: ‘The conclusion of these enquiries draws a line under this legacy issue, allowing the bank to move forward and fully focus on the future, building on the solid foundations it has already laid.
‘We are continuing, at pace, our shift towards higher yielding specialist mortgages and commercial, corporate and SME lending with a strong pipeline of business.’
Frumkin also took the opportunity to announce a return to underlying profitability in October after upgrading annual guidance in its half-year results.
The bank has recently slashed hundreds of jobs as part of an £80million cost-cutting plan after the lender secured a £925million rescue deal last year that saw Colombian billionaire Jaime Gilinski Bacal take control of the business.
Frumkin said October profitability reflected ‘the significant progress made in delivering on the bank’s strategic priorities’.
He added: ‘Our relationship-led banking model will allow Metro Bank to go from strength to strength as we forge ahead with our growth agenda and progress towards long term sustainable profitability.’
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